Nu-Pharm Inc. v. Canada (Attorney General), docket A-389-97

     Date: 19980220

     Docket: A-389-97

CORAM:      THE CHIEF JUSTICE

         LINDEN J.A.

         McDONALD J.A.     

BETWEEN:

    

     NU-PHARM INC.

     Appellant

     (Applicant)

     - and -

     ATTORNEY GENERAL OF CANADA and

     MINISTER OF NATIONAL HEALTH AND WELFARE

     Respondents

     (Respondents)

     -and-

     MERCK & CO., INC. and MERCK FROSST CANADA INC.

     Intervenors

    

    

     Heard at Toronto, Ontario, Friday, February 20, 1998

Reasons for Judgment rendered from the Bench at

     Toronto, Ontario on Friday, February 20, 1998

REASONS FOR JUDGMENT OF THE COURT BY:      McDONALD J.A.

     Date: 19980220

     Docket: A-389-97

CORAM:      THE CHIEF JUSTICE

         LINDEN J.A.

         McDONALD J.A.     

BETWEEN:

    

     NU-PHARM INC.

     Appellant

     (Applicant)

     - and -

     ATTORNEY GENERAL OF CANADA and

     MINISTER OF NATIONAL HEALTH AND WELFARE

     Respondents

     (Respondents)

     -and-

     MERCK & CO., INC. and MERCK FROSST CANADA INC.

     Intervenors

    

     REASONS FOR JUDGMENT

     (Delivered from the Bench at Toronto, Ontario

     on Friday, February 20, 1998)

McDONALD J.A.

[1]      The issue on this appeal is whether the Minister of National Health and Welfare was correct in determining that a Notice of Compliance should not issue to the appellant Nu-Pharm Inc. on its new drug submission on the basis that it failed to comply with section 5(1) of the Patent Medicines Regulations. Section 5(1) of the Patented Medicines (Notice of Compliance) Regulations states:

5. (1) Where a person files or, before the coming into force of these Regulations, has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make a reference to, a drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the patent list,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(b) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

Section 7(1) states:

7. (1) The Minister shall not issue a notice of compliance to a second person before the latest of

...

(b) the day on which the second person complies with section 5.

[2]      Nu-Pharm's new drug submissions were cross-referenced and relied explicitly on the information and materials submitted previously by another Generic drug manufacturer, which, in turn, had filed an abbreviated drug submission incorporating the testing of the original patentee of the drug.

[3]      The Minister concluded that Nu-Pharm's New Drug Submissions for Drug X and Drug Y compared or made reference to drugs that have been marketed in Canada pursuant to Notices of Compliance issued to a first person in respect of which a patent list has been submitted, within the meaning of sections 4 and 5 of the Patented Medicines (Notice of Compliance) Regulations. Accordingly, Nu-Pharm was advised that no Notices of Compliance would be issued in respect of these New Drug Submissions unless the requirements of those Regulations were met.

[4]      Upon a section 18 application, the Motions Judge dismissed the application and found that Nu-Pharm's drug submissions relied explicitly on the fact that its products are precisely the same as Generic 1's products and on the information supplied by Generic 1. The Notices of Compliance issued to Generic 1 were issued on the basis of its comparisons to the drugs appearing on the patent lists submitted by the patentees. The Motions Judge, therefore, found that there is a comparison from Nu-Pharm's Cross-Referenced Submissions through Generic 1's abbreviated Submissions to the drugs appearing on the patent lists submitted by the patentees. Thus, according to the Motions Judge, "Nu-Pharm's submissions compare its drugs with, or make reference to a drug that has been marketed in Canada pursuant to a Notice of Compliance issued to a first person in respect of which a patent list has been submitted." He concluded that "The Minister has no duty or right to issue Notices of Compliance in respect of these New Drug Submissions unless the requirements of s. 5 of the Patented Medicines (Notice of Compliance) Regulations are met."

[5]      The Motions Judge also distinguished the Merck Frosst¹ case. He asserted that that case stands for the proposition that under s. 5 of the Regulations the Generic manufacturers are allowed to pick and choose the approved drug with which they want to establish a comparison or make a reference, and that s. 5(1) is not to be construed as requiring that a notice of allegation be served on all first persons who have filed a patent list in respect to the drug in issue. The Motions Judge claimed that this scenario did not arise in this case. He stated that "Generic 1 had not filed a patent list and is not a first person within the meaning of s. 4(1)... However, there is a comparison from Nu-Pharm's Cross-Referenced Submissions through Generic 1's Abbreviated Submissions to the drugs appearing on the patent lists submitted by Innovators 1 and 2."

[6]      In spite of Mr. Radomski's persuasive arguments to the effect that Nu-Pharm had chosen to compare its product with that of the Generic and the patentee, we are all of the view that the Motions Judge was correct in deciding that Nu-Pharm must comply with the requirements of subsection 5 of the Patent Regulations before the Minister will issue a Notice of Compliance. To allow Nu-Pharm to circumvent the requirements of the Regulations on the ground that it cross-referenced its New Drug Submissions to another Generic Drug Company (Generic 1) who had filed an abbreviated New Drug Submission relying on studies of the patentee (the first person) who submitted a patent list would thwart the purpose of the Act. The purpose of the Patented Medicine Regulations was to protect the research and development initiatives of innovator pharmaceutical companies². Section 5 requires that where a submission for a notice of compliance is filed which compares or makes reference to a drug that has been marketed and a patent list submitted one must:

(a)      state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b)      allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(b) is false;

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

[7]      Subsection 5, therefore, puts the patentee on notice that a generic is marketing the same or similar drug. It allows the patentee to protect its legal, economic and proprietary interests by ensuring that they are not affected until after the Notice of Compliance has expired or, if they are, that they have received notice. Indeed, subsection (3) sets out:

Where a person makes an allegation pursuant to paragraph 1(b) or subsection (2) the person shall:

(a) provide a detailed statement of the legal and factual basis for the allegation; and

(b) serve a notice of the allegation on the first person and proof of such service on the Minister

[8]      These subsections, therefore, ensure that a person who seeks a Notice of Compliance for a drug must file an allegation and a detailed statement of its factual and legal basis, and must serve a Notice of Allegation if that person wishes to compare that drug with, or make a reference to, a drug in respect of which a patent list has been submitted. Nu-Pharm can not piggy-back its claim on the Generic Drug Company who relies on the tests of the patentee and then state it need not comply with the Act because the Generic Company did not issue a patent list. The fact remains that although it is one step removed, Nu-Pharm is relying on the tests and other work done by the patentees, whom the Generic Company relied on. While Nu-Pharm claims to be comparing its drug to Generic 1's, it, nonetheless, is, in essence, comparing it to that of the original patentee, because Generic 1 compared its drug to that of the patentee. It is a question of interpretation which requires the Court to construe the words in context so as to be consistent with the purpose of the Act. Thus, In our view, Nu-Pharm cannot circumvent the Regulations by cross-referencing its drug submission to a generic, which filed an Abbreviated Drug Submission.

[9]      As for the argument that the Merck Frosst case³ applies to this case on the ground that because Nu-Pharm chose only to compare its product to the Generic, the Generic is the first person and since the Generic did not file a patent list, Nu-Pharm need not comply with section 5, we are all in agreement that this argument must fail.The facts in Merck were quite unusual in that Merck had entered into an agreement with Zeneca to license the drug and, therefore, they both became first persons. Also, in that case, the Motions Judge was not dealing with cross-referenced or abbreviated submissions. Further, in this case, Generic 1 does not constitute a first person within the meaning of subsection 4(1).

[10]      Since this is a discretionary order we are satisfied that the Motions Judge had ample evidence to decide as he did. We are unable to find any error which would warrant interference by this Court. The appeal is therefore dismissed with costs.

     "F.J. McDonald"

     J.A.

[11]     

     FEDERAL COURT OF APPEAL

     Date: 19980220

     Docket: A-389-97

CORAM:      THE CHIEF JUSTICE

         LINDEN J.A.

         McDONALD J.A.     

BETWEEN:

    

     NU-PHARM INC.

     Appellant

     (Applicant)

     - and -

     ATTORNEY GENERAL OF CANADA and

MINISTER OF NATIONAL HEALTH AND WELFARE

     Respondents

     (Respondents)

     -and-

MERCK & CO., INC. and MERCK FROSST CANADA INC.

     Intervenors

    

REASONS FOR JUDGMENT

__________________

     ¹      Merck Frosst Canada Inc. v. Minister of National Health and Welfare et al. (1996), 171 C.P.R. (3d) 156

     ²      See Eli Lilly & Co. v. Novopharm Ltd. (1995), 60 C.P.R. (3d) 163 (F.C.T.D.)

     ³      Merck Frosst Canada Inc. v. Minister of National Health and Welfare et al. (1996), 71 C.P.R. (3d) 156